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StanChart chief laments ‘crap’ stock price as profits jump

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Standard Chartered’s chief executive Bill Winters said the bank’s “crap” share price did not reflect its true value, as fourth-quarter profits surged almost tenfold.

The UK-based lender said pre-tax profits for the final three months of 2023 jumped from $123mn to $1.1bn, which was in line with analysts’ expectations, driven by higher interest income and a decline in loan loss provisions and restructuring charges. The figure for the full year was up 19 per cent to $5.1bn.

“Our share price reflects little of our optimism about prospects and seems heavily influenced by . . . downside concerns,” Winters said in a statement.

He was more blunt in a subsequent press conference. “The share price is crap. I know that’s going to be a quote,” he said, acknowledging that “the concerns are real and we take them seriously”.

The stock rose 8 per cent to 656 pence on Friday but it has fallen about a third since Winters took the helm in June 2015. He is by far the longest-serving chief executive of a large UK-headquartered bank.

Winters said he needed to address several misperceptions about the company: that costs are too high, the bank is too complex and bureaucratic to get things done and that it is “spread too thin” across a variety of clients, products and geographic markets.

“We take those challenges to heart,” he said, pointing to a reduction in its cost-income ratio from more than 100 per cent to 63 per cent, low levels of loan impairments during the past five years, a return on equity of 10 per cent last year and the ambition to reach 12 per cent by 2026.

Winters unveiled a cost-saving plan called “Fit for Growth” that should save about $1.5bn of expenses over the next three years by digitising and simplifying the bank’s systems. However, StanChart will spend about the same amount on the IT and organisational overhaul.

The bank also promised to improve capital returns for shareholders. It unveiled a $1bn share buyback, and pledged to return $5bn to shareholders over the next three years and increase its dividend “over time”. It announced a dividend of 27 cents for 2023, equivalent to about $700mn.

Joseph Dickerson, analyst at Jefferies, said: “The focus of the results in our view is to what extent investors buy in to the 12 per cent return on equity guide for 2026. The implication is for better revenue and lower costs than the market envisages.”

Winters voiced confidence about the outlook for Asia despite the bank having taken impairment charges on the value of its stake in China Bohai Bank, a mainland lender.

It reported a $153mn charge on its Bohai stake in the fourth quarter, in addition to a $700mn charge in October. The bank also reported $282mn in impairments related to Chinese commercial real estate for 2023, accounting for more than half of its total credit impairments for the year.

The bank’s profits in Asia, its biggest market, rose 18 per cent year on year in the fourth quarter to $928mn. It reported a $229mn quarterly loss in Europe and the Americas, where it lost $56mn in the same period a year earlier.

“Asia is likely to be the fastest-growing region continuing to drive global growth,” Winters said. He added, however, that “a sluggish housing market in China” posed a risk and that commercial real estate was “still finding its bottom”.

He also commented on US-China relations and the potential impact of the re-election of Donald Trump on any trade war. “I don’t think there is a Trump overhang [on our shares]. There is a US-China overhang,” Winters said.

“Our base case is that neither the US nor China wants a rupture, it would just be too costly to both countries,” he said. “The trade flow and investment flows between them are still very healthy and that is the heart of our business.”

Winters’ total pay package for the year rose to £7.8mn, up 22 per cent from last year, largely because of payouts from a long-term incentive plan.

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